chapter 5

jesse livermore was the greatest trader of his day. around 30

he had about 100 million dollars in his bank account. by 1929
he was well known around the world for his trading, but the
same exact stock market that made him rich and famous
crashed. his legacy was semented in stone. his wife was
scared for him, especcialy after hearing stories of other
wall street speculators commiting suicide. she and her
children greeted livermore while crying, before she ran into
her room, crying horribly. jesse stood completely confused
before realizing what happened. he told his family that he
guessed that the market would crash, and, shorted the market.
on that day he made 3 billion. he became the richest man in
the world, by pure luck.

while they celebrated success, Abraham Germansky, a

multimillionare real estate developer, wandered the streets
woefully. like almost every multimillionare in new york did,
he invested heavily in the stock market.

around the ending of october 1929, the new york times

published an article that portrays a tragic end. an attorney
by the name of bernard h sandler was asked yesterday morning
by ms. abraham germansky to help find her husband, missing
since thursday morning. ms germansky that a friend saw her
husband tearing a strip of sticker tape into bits near wall
street. there is a very noticable contrast: the crash made
jesse livermore the richest man in the world while abraham
germansky’s life was ruined. but, in the next few years,
Jesse Livermore ended up in the exact same situation.

they both shared something very similar: they where both good
at getting rich, and, similarly, both very bad at staying
rich.

40% of companies who become publicly traded losed almost all

there value over time. capitalism is hard because getting
money and keeping money are very contrasting skills. keeping
money requires humility, while getting money means taking
risks.

the head of Sequonia Capitial, michael Mortitz was

interviewed by Charlie Rose about why his company was so
successful. mortitz mentioned longetivity, so Rose asked him
why. mortitz says that “they were almost always terrified of
going out of business.” he cant afford to rest, because he
has no idea what would happen in the next few years, or even
months. survival is success in the economy.

there are two reasons why survival is key with money. one is:
few gains are great enough to destroy everything. the second
is: the counterintuitive math of compounding. compounding
works like a plant: tending to it, nurturing it, and seeing
it grow. getting that growth requires survival. as an
example, lets talk about Rick Guerin.

if you’ve heard of the investing duo (Warren Buffett and

Charile Munger), then it will come as a suprise to some that,
around 40 or so years ago, Rick Guerin was originally apart
of the team. they used to do almost everything together. but
then Guerin disappeared. Buffett said, in a conversation with
investor Mohnish Pabrai, that charlie and warren knew that
they would get incredibly wealthy, and that they both wasnt
really in a hurry to get there, but Rick was.

Nassim Taleb puts it this way: having a head start and

surviving is completely different. both needs the other. you
need to avoid failing at all costs.

applying this mindset in your own life requires 3 things: 1.

be financially unbreakable. this means that keeping your good
returns undisturbed will give you even better returns. 2.
planning is important, but going off the plan is even more
important. a plan is useful when it can survive testing it,
ie surviving everything in life. most of peoples lives are
filled with unsertanty. 3. be optimistic about the future and
paranoid about how your going to reach there. being
optimistic doesnt mean to just “be happy”. it’s about
beliving that you have the odds, and you will win. in the
past 3 years our ecomony has crashed, a near endless amount
of people died of covid, and the stock market crashed twice.
but the economy has been showing great signs all around us.

chapter 6
in 1936, Heinz Berggruen fled Nazi Germany for the United
States, where he studied literature in U.C. Berkeley. around
the 1990s, Heinz Berggruen was one of the most respected art
dealers of all time. but, as a child, he was very plain, and
not very interesting. in 2000 he sold some of his art to the
german government for 100 million euros. the germans
considered it a donation, because it was pretty much a
bargain. almost all of his paintings pretty much costed 1
billion. collecting that much paintings is nearly
unbeleviable. art very much subjective, especially in the eye
of the beholder. how can you tell that the art you own will
become the most sought-after works of the century?

it could be luck, skill, or something else. Horizon Research,

an investment firm, has a third option. the great art dealers
acted like index funds, buying up any kind of art they found,
then holding on to it for a very long time, waiting for a few
winners. burggruen could be wrong most of the time and still
turn out rich.

steamboat willie put Disney on the map, however his buisness

success wasnt very good, as his first studio went bankrupt.
all his films where monsterably expensive. by the mid 1930’s,
they made over 400 films. most of them was short, some was
very beloved, and some cost a fortune. snow white changed
everything. the 8 million it earned in it first few months in
1938 paid off all of there debts, certain employees got
retention bonuses, and they got a new studio in burbank, CA.
anything that is very profitable and famous is the result of
a tail event - an one-in-a-million event. when we focus on
famous, very profitable works, its very easy to underestimate
it. some of them are very obvious. take NFTs or non-fungible
tokens. most “smart” people who invest in it, they usually
expect to make millions from it, however, they usually dont.
instead of expecting to have some that fail, some that dont,
and some that will fully win the bet, most people invest
without even knowing the drawbacks. (NFTs are already a bad
idea, as they end up helping with climate change, scamming,
and other unsavory things. see Line Goes Up – The Problem With
NFTs for more information)

when you accept that tails drives everything, you realize

that it’s normal for everything to change, wether for good or
bad. one of the greatest investors of our time, peter lynch
said, “if this buisness is good, youll be right 6 out of 10
times.” some jobs need you to be perfect. investing,
buisness, and finance are not those jobs. “nobody makes good
decisions all the time” is one thing youll learn from
buisnessmen and investors. take amazon: when they released
the fire phone, it completely failed. shortly after the
launch, jeff bezos said: if you think that’s a failure, where
working on much bigger failures right now. it’s ok for
companies as big as Amazon (such as disney) to release
failure after failure, because they are too big to fail.

take elon musk’s twitter, as another example: after buying it

he made multiple bad desisions after bad desisions - such as
paying for verification - in order to earn millions. but,
suprisingly, he completely failed. the stock actually fell
because of his bad desisions.

it shows that some billionares can show off power and

richness, but when they are finally found out, almost
everyone hates them.

there are a nearly uncountable amount of galaxys in space,

yet in our tiny speck of the universe, we are the (possibly)
the only life forms on a planet with intelligent life.

chapter 8
one reason for being a valet is driving cool-looking cars
such as Lamborghinis, Rolls-Royces, and all the other “rich
people” cars. the author always had a dream to own one of
those cars because it showed you were rich, had class, and
other pointless things. the irony is that he never really
looked at the drivers. when you see somebody driving a rolls-
royce you think “i wish i had that car so that people think
im cool.” this is a paradox: you might want one of those cars
to look cool, but most people will only look at the car. all
you really want is admiration from other people. does this
apply to people with big homes? expencive jewlery? yes and
yes. if you want respect and admiration, then being kind,
polite, and humble will get you there, not money and cars.

chapter 9
one of the most important ironies in money (yes, seriously)
is that wealth is what you dont see. most people see ferrari
drivers as rich, even though most of them are people who only
got a pretty mediocre success in their jobs, and spent it all
on a “nice” car. some people buy nice cars, but eventually
have to sell it, because they couldnt really afford the cars
cost of maintenance.

there are endless stories of people buying or renting nice

cars, expencive jewlery, and other material wealth and losing
it almost immediately. but weath is not the nice cars it’s
small things. Rihanna nearly went bankrupt after
overspending, and tried sueing her financial advisor. he said
“was it necessary to tell her that if you spend money on
things, you will end up with the things and not any money?”
everybody wants to buy nice things to make themselves feel
better. being rich means you have a very stable income.
dieting - and exersize - is a very useful example: if you
keep exersizing instead of rewarding yourself with a big meal
- if you keep on investing, and not buying useless things -
you can gain that satisfaction. you cant find wealthy role
models - you only find rich ones. there are some wealthy
people who spend a lot of money, of course. but we dont see
the millions of dollars in there bank account, and the
endless investing portfolios. almost everybody wants - at
least at some point in there lives - to be rich. freedom you
dont get if you stay with your 100s of thousands of dollars
in your bank account. people are good at imatating others to
learn. most people cant find wealthy people. i think, as a
good (not example, more of a suggestion) is to stay modest.
not modest as in money, i mean modest as in dont buy what you
want, buy what you need. save your money. dont waste your
“big break” on nice car and fancy jewlery. keep it. put the
big money in the savings.